from the feeding-right-into-the-program dept

Last week, we wrote about the ridiculous suggestion from the former Newspaper Association of America (now called the News Media Alliance) that President Donald Trump should scale back fair use because newspapers still don't like Google. As we noted, at a time when Trump has been strongly endorsing censoring newspapers, for those very newspapers to tell Trump to undermine a key cog in protecting free speech was absolutely ridiculous.

And, of course, now we can add the legacy recording industry to this same "shoot foot" brigade. Upon hearing about Trump's meeting with the heads of a bunch of top tech companies, the RIAA and a bunch of related recording industry associations (including ASCAP, BMI, A2IM, NMPA, SoundExchange and more... ) have sent a letter to Trump (found via Variety), asking him to force the internet companies to nerd harder to find better ways to censor the internet. This is fairly incredible, seeing as the traditional recording industry wasn't exactly a major Trump supporter. For them to now reach out to Trump and urge him to increase censorship of the internet is fairly astounding and sickening. Basically, to the RIAA and friends, hatred of Google and the internet is more important than concepts like free expression or holding our elected officials accountable.

Of course, the legacy recording industry doesn't come out and directly say "censor the internet," but that's exactly what they're asking for here (though watch the blog posts from defenders of the industry howl about me making this intent obvious):

Surely the world’s most sophisticated technology corporations can do better – by helping to prevent
illegal access and paying fair market value for music with prices set by or based on the free market.

Strong protection for intellectual property rights will assure growth in both creativity and technology,
benefiting the American economy as a whole.

We hope you will lead the effort to assure American creativity is encouraged, invested in, protected and
fairly compensated in a manner that carries out the exclusive rights guaranteed in the Constitution to
those who, with the genius of their mind, form the cultural identity of our great nation.

The call for censorship is in "preventing access" which means blocking what you can do online. The hilarious part is the "prices set based on the free market" because that's exactly what the industry is protesting. The whole "value gap" bullshit is basically the industry saying "we do not like what price the free market is setting, and therefore we need the government to artificially inflate prices through monopolies.

Just to be clear, if you're whining about not getting "fair compensation" you're clearly saying "I'm upset about the price the free market has set."

But the bigger issue here is the censorship piece. I shouldn't have to detail here how many times we've shown that copyright is abused for censorship purposes (including by governments). The call to hold platforms more accountable and putting the onus on them to "nerd harder" is a call to ramp up tools for censorship-via-copyright. This is pretty ridiculous -- and one hopes that musicians who have spoken out against Trump will also speak out against this demand to give him and his friends more power to censor parts of the internet.

from the calm-down-people dept

For the past couple of years now, the Justice Department has been exploring the so-called "consent decree" around music publishing. This was an agreement, first made in 1941, and then reviewed in 2001, on how music performing rights organizations (mainly ASCAP and BMI) could operate without violating antitrust rules. Without such consent decrees, there was a quite reasonable fear that the performing rights organizations (PROs) would abuse their monopoly positions. This is not a theoretical argument. If you look around the globe, there are many, many, many, many, many stories of these organizations behaving badly.

In this case, ASCAP and BMI had been whining that because of those darn internet companies not paying enough, they need to get rid of the consent decree, mainly so that they can do more to jack up rates (there's more to it, but the end result is they want to be able to withhold rights to force rates up). Of course, in opening up this can of worms, they also got the DOJ to start looking more closely at other practices, including an exploration into so-called split works or "fractional licensing." The details here can get confusing, but in short: when a work has multiple copyright holders, many have argued that you need to get a license and/or approval from every copyright holder. But if you look at the legislative history of the 1976 Copyright Act, legislators made it clear that under the act, they intended to make it clear that any copyright holder in a work with multiple authors had the right to license the whole work.

In the end, the Division concluded that only full-work licenses could fulfill the purpose and meaning of the requirement in the consent decrees that ASCAP and BMI offer blanket licenses that provide users the ability to play all the songs in the PROs’ repertories. Importantly, this does not mean that ASCAP and BMI are required to provide a full-work license to a work when their members cannot grant them the ability to offer such a license. That is, we do not suggest an interpretation of the blanket license that is inconsistent with the Copyright Act. Rather, if the members of ASCAP or BMI are unable to grant to their PRO the rights to license their works on a full-work basis, those works are ineligible for licensing by ASCAP or BMI.

Both sides in this debate pointed to past practices they believed supported their view of whether ASCAP and BMI licenses were full-work or fractional. We think the evidence favors the full-work side. Our determination begins with the language of the consent decrees themselves, which unambiguously require ASCAP and BMI to offer licenses to all works or compositions in their repertories, and not to interests in works. For example, in the case of ASCAP, it must provide a license to perform “all of the works in the ASCAP repertory.”

Our view is also based on what is required for all participants in the industry to enjoy the substantial procompetitive benefits of the PROs’ blanket licenses – benefits that differentiate the PROs from joint price-setting entities that often present significant problems under the antitrust laws. The Supreme Court described blanket licenses in the BMI case as providing “unplanned, rapid, and indemnified access” to the songs in the PROs repertories. Fractional licenses would not offer the benefits the Supreme Court described.

A full-work blanket license from ASCAP or BMI allows the music user to publicly perform, without risk of copyright infringement liability, all works in the licensing PRO’s repertory. Particularly for music users – such as bars and restaurants – that cannot meaningfully control in advance the music they play in public, this feature of the PROs’ licenses benefits both the licensees as well as music creators in that it ensures that users can and will continue to play the creators’ music.

Fractional licensing would not offer the same benefits to users. If a PRO’s license granted a user something less than a license to play a particular song, music users seeking to avoid infringement liability would face the daunting task of identifying and ensuring they obtained licenses from all fractional owners – a challenge made more difficult by the lack of a comprehensive, reliable, and transparent catalog of rights. Under those conditions, even music users with control over the music they perform would have to curtail their performance of music until they were certain they had obtained licenses from all fractional owners. As BMI itself argued in a recent rate-court filing, a BMI license grants to a music user “insurance against copyright infringement . . . and immediate access to more than 10.5 million works in BMI’s repertoire.” A fractional license could not provide these benefits.

A lot of this was rumored a month or so ago, and a bunch of songwriters and publishers freaked out about it. They shouldn't be freaking out about it. This is actually good for them. Back when the expected result was leaked to the press, even Digital Music News, which frequently sides with the legacy industry, said directly that the songwriters' freak out was wrong and that this was a good thing for the music world -- and also notes that this could help finally create the holy grail in the music industry of a single database of published songs.

This should also help create more useful services that will get consumers to use authorized music sources, rather than unauthorized ones. As we've covered, ASCAP played some ridiculous tricks on music services like Pandora, and got slammed for it. But with full work licensing, such gaming will be even less possible, creating more openings for new music services to thrive.

Of course, the PROs, ASCAP and BMI, immediately lost their shit over this announcement and promised to fight back. BMI also announced that it will go to court to try to overturn this decision, while ASCAP has decided to focus on getting Congress to fix it through the legislative route (there's a reason for this bifurcated approach: in the cases involving both organizations, both BMI and ASCAP recognize that BMI has a judge that seems more willing to accept BMI's version of the story, whereas ASCAP's slimy behavior was so egregious that the judge covering its case actually understands the issues at play).

The end result, though, is the same old story: ASCAP and BMI want to abuse their monopoly position to try to jack up rates. Meanwhile, by not allowing that to happen, most songwriters will actually be better off, allowing more useful services to thrive, creating more opportunities for revenue. It's kind of insane that we have to point this out over and over again, but the legacy industry always fights against new innovations in the false belief that it will harm revenue -- yet when they learn how to embrace the opportunities, it turns out that a larger audience has been created and there are even more ways to make money. But ASCAP and BMI, like the RIAA on the recording side, are so focused on controlling their turf rather than seeing the big picture that they miss this entirely.

from the stupid-pre-1972-sound-recordings dept

So for years and years and years, every time a musician or a group whined about politicians using their music at an event, we'd point out that they have no legal basis to complain. Assuming either the venue or the campaign (or both) had the proper blanket licenses from ASCAP/BMI/SESAC no other permission was needed. That's actually part of the point of the structure of those blanket performance licenses. Everyone recognizes that it would be virtually impossible to play music publicly without such a blanket license structure. And so, every time a musician complains that the use was "unauthorized," they're almost certainly wrong. In fact, we pointed that out (again) for the nth time earlier this week. Now, as we've said all along, we still think smart politicians and smart campaigns should first seek out musicians who don't mind (or, better yet, who endorse the candidate), because otherwise they're just giving someone famous an easy platform to slam them. But, from a legal standpoint, we've always pointed out that there's basically no legitimate argument here, and people who toss around non-copyright theories like publicity rights and Lanham Act arguments are generally wrong.

But... we forgot about one thing. Copyright law is so screwed up that there actually may be a case where the law does require permission. And it has to do with pre-1972 sound recordings. If you've been reading Techdirt for any length of time, you know that we've discussed this issue many times in the past. Historically, while compositions were covered by copyright, under the 1909 Copyright Act sound recordings were not. This resulted in a patchwork of state laws (and state commonlaw) that created special forms of copyright at the state level. Eventually, sound recordings were put under federal copyright law, but it only applied to works recorded after February 14, 1972. Works recorded before that are not under federal copyright law, but remain basically the only things under those state copyright laws (the 1976 Copyright Act basically wiped out state copyright laws for everything but that one tiny thing).

In the last few years, this has created a bit of a mess and a whole bunch of lawsuits. Why did these lawsuits just start recently? In large part because the recording industry is desperate for new revenue streams, having failed to adapt to a changing market. So they've focused an exorbitant amount of attention on using pre-1972 sound recordings as a wedge against internet platforms. We've covered various stories on this, with many siding with the labels, but a few going the other way.

Needless to say, the law around pre-1972 sound recordings is still a bit of a mess, and arguably a work in progress, and the courts struggle to sort it all out. And that brings us back to the issue of blanket licenses. The always excellent reporter Eriq Gardner has a fantastic story noting that thanks to this mess with pre-1972 sound recordings and what copyright regime they fall under, it's possible that the Rolling Stones may have a legitimate legal gripe against Donald Trump and the Republican convention, while Queen... would not. Under modern copyright law, songs recorded on or after February 15th, 1972 require an ASCAP/BMI/SESAC license for the performance rights. But performance rights for sound recordings was basically a new concept at the time, and it's unclear how they apply to pre-1972 sound recordings.

The issue is not that simple, because nothing around this particular issue is simple. However, based on at least some of the rulings in pre-1972 sound recording copyright cases, federal copyright law doesn't apply at all to those songs (other court opinions have come out otherwise). And thus, there's an argument that the requirements involving blanket licenses for pre-1972 sound recordings may not apply, because the use of the sound recording may require a special public performance license from the copyright holder:

To sum up where we're at: An ASCAP license covers the public performance of songwriting, but not the sound recording. A sound recording authored before 1972 like "You Can't Always Get What You Want" might require special permission to be performed in public. Whomever owns that song — whether it's the Rolling Stones or their record label — could bring a lawsuit asserting misappropriation.

But... it depends. In this case, it depends on the specific state copyright laws in Ohio and how a judge interpreted it. Of course, it's still tremendously unclear because, (as we noted at the time), the big ruling on pre-1972 sound recording copyrights for Flo & Eddie basically upset decades of settled law on whether or not "public performance" rights applied under state copyright law. For decades, it was strongly believed that those state copyright laws applied to things like reproduction and distribution but not public performance rights. It's only through rewriting history (and confusing some judges) that suddenly public performance rights have been shoehorned back into those mostly obsolete state copyright laws.

As Gardner points out, one of the most famous cases involving performance rights actually involves Ohio state law. It's the somewhat infamous Zacchini v. Scripps-Howard involving a question around a TV station broadcasting an "entire" human cannonball act. In a ruling that is still troubling, the Supreme Court turned performance rights into a quasi-copyright. But that ruling could be used if the Rolling Stones tried to argue that the performance violated Ohio state copyright laws on public performances. It would be a nutty case, and a risky one, but it's possible that it might work. I'm guessing the Rolling Stones aren't actually interested in following through on any actual legal threat, but this is yet one more example of just how screwed up copyright law is today.

from the this-again? dept

Yes, let's start with the obvious: John Oliver's "Last Week Tonight" is a comedy program meant to entertain and is not meant to be journalism. It's a point that Oliver himself has made repeatedly. But others disagree with him, pointing out that his show regularly does actual journalism. The fact that he's hired a bunch of journalists on his team kind of says a lot. Also, according to multiple people I know who have been interviewed for stories on his show, while his focus is on making things funny, his team also spends a lot of time making sure they get the details right. It's why we so frequently end up posting his videos on stories that relate to Techdirt topics -- because they're not only entertaining, but are also generally dead on in accuracy. It's why we've posted his videos on net neutrality, corporate sovereignty, encryption, surveillance, civil asset forfeiture and patent trolls.

But this past weekend, he not only covered last week's Republican National Convention, but also, separately, the fact that representatives for both Queen and the Rolling Stones complained publicly about the RNC using their music in prominent parts of the convention. Oliver got together a bunch of famous musicians (many of whom have protested politicians using their music) to sing a song telling politicians not to use their songs, claiming that it's "stealing" and unauthorized because the politicians didn't reach out to get permission.

This is flat out wrong in most situations. As we've pointed out again and again and again and again, in nearly all cases, politicians using music at an event have the proper licenses. They don't need to get permission from the musicians so long as either the campaign or the venue have ASCAP or BMI blanket licenses, which they almost always do. The whole point of ASCAP/BMI licenses is that you don't need to get individual permission from the artists or their publishers.

There are instances, occasionally, where politicians ridiculously don't have such a license, but it's pretty rare. And there may be a few other narrow exceptions, such as if there's an implied endorsement by the musicians, but that's rarely the case.

Unfortunately, the song from John Oliver and friends ignores all of that, even stating directly at one point that for a politician to use music, you first have to call the publisher. That's wrong. ASCAP and BMI already have taken care of that.

Perhaps this isn't a huge deal, but one would hope that Oliver would actually get the basic facts right on this too, because every election season this issue comes up and spreading more misinformation about it doesn't help.

from the calm-down,-sparky dept

As we've mentioned, today is the day that comments are due to the Copyright Office on the effectiveness (or not) of Section 512 of the DMCA, better known as the "notice and takedown" safe harbor provisions. We'll be posting the details of our own filing at some point (possibly not until Monday as we're still finalizing a few things), but some of the other filings are starting to filter out, including a fairly astounding 97-page document from a bunch of legacy music industry organizations (about half of which is the actual filing, with the rest being appendices), including the RIAA, ASCAP, AFM, NMPA, SoundExchange and more. It's basically every organization that represents the way the industry used to work -- and the document reads like an angry polemic against the internet. It would have been much shorter, if they just wrote "our business used to be much better when we had more control and less competition -- and we never bothered to adapt, so fuck Google and all those internet companies -- and let's change the DMCA to punish them and magically bring back the good old days."

Also, the filing seems to leave out the fairly important point that it was these groups that basically wrote the DMCA that they're now whining about. Actually, let's get even more specific. The comment here was co-written by lawyer Steve Metalitz -- who has a way of showing up whenever some legacy industry is pushing to make copyright laws much, much worse. Metalitz's own bio emphasizes the fact that, as a lobbyist, he was "instrumental in the drafting" of the DMCA:

So it seems rather... rich, for the legacy music industry to hire Metalitz, who proudly states that he was "instrumental in the drafting" of the DMCA while lobbying on behalf of these same groups, to now write a jeremiad about how totally awful the DMCA is for these same groups. But that's what's happened. The document literally mentions Google or YouTube more than once per page. But it starts right in with the industry's concerns, which might be summarized as "why hasn't Google stopped the evil piracy!?!?"

The Music Community’s list of frustrations with the DMCA is long. A broken
“notice-and-takedown” system. Toothless repeat infringer policies. Active services
mischaracterized as passive intermediaries. Incentives for services to embrace willful
blindness instead of preventing known and widespread infringement. The words
“representative list” read out of the statute.

Basically, Metalitz uses the document as a chance to list off how he's sad that the courts have basically ruled against copyright holders trying to chip away at the safe harbors at pretty much every turn:

Courts have also given little meaning to key provisions for content owners in the
DMCA bargain. Examples include “red flag” knowledge, repeat infringer policies and
representative lists. The result: safe harbor status for services that choose to stick their
heads in the sand rather than do their fair share, forcing content owners to divert valuable
resources from away creating content to sending minimally effective take down notices,
or for content owners with limited resources, to actually refrain from sending takedown
notices at all. Content owners, especially those with limited resources, simply cannot
take on the entire digital universe alone.

At its worst, the DMCA safe harbors have become a business plan for profiting
off of stolen content; at best, the system is a de facto government subsidy enriching some
digital services at the expense of creators. This almost 20 year-old, 20th Century law
should be updated.

Astoundingly, this comment claims that the results in the YouTube and Veoh lawsuits prove how broken the DMCA is and how much it favors internet companies. Remember, Veoh was a YouTube competitor that won its lawsuit that had been filed by Universal Music... but went out of business due to the legal costs of defending itself under the DMCA. And Metalitz and the RIAA are bitching about the fact that Veoh won... as if that was the travesty in the case, rather than the fact that the recording industry was able to shut down a perfectly legal web service that many people found useful.

The comment goes on to whine that even as more music is available to the public these days, revenue is down for some of those who signed on to the comment (the comment is careful not to mention that ASCAP, BMI, SESAC and SoundExchange revenue keeps going up... but... those inconvenient details must be ignored). What the filing also ignores, of course, is that these very same players fought tooth and nail against any of the innovative services that helped make this revolution in music accessibility possible. They basically now want to tax all the innovative companies who experimented and found the models that work and make consumers better off, while they themselves did none of that and actively sought to block nearly every new innovation. Talk about entitlement.

The comment also ignores the basic fact that if so much more music is being consumed today, that seems to suggest that the law must be working in some manner, seeing as the purpose of copyright law is to incentivize the creation of new works so that the public can benefit. By their own words, that seems to be happening.

Despite music being more popular than ever today, U.S. music industry
revenues have been virtually flat since 2010 and are down nearly 50% since the DMCA
was enacted in 1998. This has led to what we call the “value grab”, creating market
distortions that lead to bizarre statistics like vinyl records generating more revenue for the
industry in 2015 than the billions of on-demand ad-supported music streams on YouTube
and similar services.

Except, of course, that comparison between vinyl and YouTube is total bullshit. As we were just discussing a week ago, the industry is comparing apples and oranges, using the gross "retail value" on vinyl (ignoring discounts and all the money that goes to everyone in the distribution chain) and only counting the net "wholesale value" on free streams (and ignoring the upsell opportunities or other revenue that comes from ad-supported streams).

The summary so far: we wrote the DMCA, but now we're going to whine about it. The public is benefiting like never before from new music -- so we're going to ignore that the purpose of copyright law appears to be met. We're not making as much money as we used to (ignoring that some of us are making much more than we used to)... but we see big internet companies making lots of money, so we're going to ignore that it's probably because they innovated and built services the public wanted while we sued our own biggest fans.

Compelling!

And, of course, the comment pushes for a "notice and staydown" regime:

Copyright owners should not be required to engage in the endless game of
sending repeat takedown notices to protect their works, simply because another or the
same infringement of the initially noticed work appears at a marginally different URL
than the first time. The current standard of “URL by URL” takedown does not make
sense in a world where there is an infinite supply of URLs. As described in the response
to Question 15, technologies exist to identify content that is reposted on a digital service
after it is removed, services of all sizes have implemented them, and they should be
deployed as a standard industry practice.

Again, this ignores the basic fact that copyright is context dependent. And you can't put a total block on content, because you don't actually know if the content is actually infringing each time. Hell, remember in the Viacom case against YouTube (which the comment whines about), Viacom had to admit that the evil pirate uploaders to a bunch of the videos... were actually Viacom employees trying to market Viacom content. This is why we don't do full on content blocks, because just because the content is up, doesn't mean that it's infringing.

Even more ridiculous, while at one point noting that almost no one files counternotices, so that means that DMCA takedowns are almost all legit (despite a recent study debunking this point), it later whines that there are too many false counternotices:

In our experience, the counter-notification process results in too many false-positive
counter-notices. For example, IFPI received counter-notices on 653
infringements, based on a sample of 98,753 infringements noticed to YouTube. After
reviewing these counter-notices, it appeared that over 80% of the counter-notices had no
good faith basis for claiming “mistake or misidentification,” the only valid statutory
grounds for a counter-notification. Yet, based on this sample, the association
representing the rights holders would be required to institute over 500 lawsuits in order to
enforce their rights. This is an unmanageable burden. These statistics further
demonstrate that the deck is unfairly stacked against rights holders.

Filing 500 lawsuits would be an "unmanageable burden?" Funny, the RIAA was able to go after at least 30,000 individuals. And, really, this paragraph acts as if filing a lawsuit is the only possible remedy in such a situation. It's not.

Also, trying to make sure that they're as evil and against the public and fans as much as possible, the comment actually decides to whine about the ruling in the dancing baby case, saying that it's some horrible burden to have to consider fair use before sending a takedown, even though they just need a subjective good faith belief, rather than an objective one:

We take this opportunity to highlight one case in particular, Lenz v. Universal
Music Corp. In that case, contrary to Congressional intent and the weight of authority
concerning who has the burden of claiming and proving fair use, the court held that a
copyright holder must subjectively consider fair use before submitting a DMCA notice.
This unique decision, and the fanfare that has followed it, is quite remarkable considering
that other courts have expressly rejected that view, and that the Supreme Court has
routinely held that the burden of proof for a fair use defense rests on the accused
infringer.

They also whine that the newly amended version of that ruling took out the random dicta that an automated takedown system could meet the standard.

Believe it or not, that's just a sampling of all the ridiculousness in the comment. It's simply not a reality-based document. One hopes that the Copyright Office might actually recognize that, though that seems unlikely.

from the something-doesn't-add-up-here dept

As we've been discussing, the two big music collection societies in the US, ASCAP and BMI, are desperately fighting to get the DOJ to alter (or end entirely) the "consent agreement" that they operate under. The consent agreement, in various forms, has been in place for decades, after the DOJ properly recognized that in licensing songwriters' and publishers' public performance rights, they had something of a monopoly. And monopolies can be dangerous when abused. Thus the consent decree to keep the organizations in line. However, both are really angry about this, in large part because they believe that without the consent decree, they could create a world in which they could force everyone to have to pay much higher fees (you can see some of how they tried to collude with publishers to jack up rates to Pandora).

So far, the attempt to get rid of the consent decree has not been going well. It has resulted in more investigations into the publishers for collusion for one thing. The DOJ has also apparently realized that the collection society's treatment of songs with multiple copyright holders may be another anti-trust violation.

And, yet, ASCAP and BMI keep trying to convince everyone that they're suffering under this "obsolete" consent decree, and they need to have it modified greatly. BMI, in comments to the DOJ, has claimed that it's suffocating under the current system, which it says is "broken":

The digital revolution in information processing and communications has completely
transformed the way music performances are heard by the public and equally changed the way in
which information about music performances is collected and processed. In particular, the rise
of Internet streaming as a principal way the public hears performances of music has created
market needs that are now not being met because of inefficient and anticompetitive restrictions in
the BMI consent decree that serve no sound purpose today.

There is an urgent need for action now. BMI agrees with the Register of Copyrights’
recent testimony characterizing music licensing as “broken,” and certain aspects of the BMI
consent decree have contributed to that breakdown. The decree creates rigidities and restrictions
in the way BMI must operate that undermine BMI’s efficiency as a resource for both music users
and music copyright owners in the digital world. The existing rate court mechanism has proven
too slow, too expensive, and too legalistic to keep up with the speed of change in real-world
markets today. The need is so dire that, rather than press for comprehensive reform at this point,
in these public comments BMI urges the Department to prioritize particular changes that address
these immediate needs.

BMI, whose full name is Broadcast Music Inc., collected $1.013 billion for the 12 months that ended in June, up almost 4 percent from the year before. That is slightly more than the $1.001 billion that its competitor Ascap took in last year.

In the number that will be scrutinized most closely by musicians — royalties — BMI paid slightly less than its rival. After deducting its operating expenses, BMI distributed $877 million to its thousands of members, including songwriters like Taylor Swift, Nile Rodgers and Adam Levine of Maroon 5. Last year, Ascap paid its members $883 million.

Why is it paying less than ASCAP? BMI doesn't blame the broken consent decree, but rather "significant legal costs" made up mainly of its lawsuit against Pandora. In other words, something that BMI had control over. The article also notes this little fact:

Since 2005, BMI’s collections have increased about 40 percent.

So, uh, can we hear again about how "dire" the situation is and how BMI can't function, even as its revenue has grown 40% in the last decade and it's setting all kinds of new records? Did BMI think the DOJ would just ignore that bit?

from the what's-a-free-market dept

Michael Corleone would understand. Just when music companies and their performance-rights organization (PROs) thought they were getting out from under supervision by the U.S. Department of Justice, the DOJ may be about to pull them back in.

For some time now, the DOJ's Antitrust Division has been investigating whether to modify the special antitrust consent decrees that govern the two leading PROs: the American Society of Composers And Publishers (ASCAP) and Broadcast Music Inc. (BMI). These broad settlements, originally reached in 1941, were designed to prevent anti-competitive behavior by the music publishers and set the rules for how the PROs can operate. This includes licensing on non-discriminatory terms (preventing the PROs from blocking a radio station or music service from playing their songs).

The consent decrees have been modified before; BMI's was amended in 1994 and ASCAP's in 2001. But some music publishers argue these agreements are showing their age. The publishers and the PROs are hoping (and expressly asking) the DOJ to agree with their view that, here in the Internet Era, digital music doesn't need so much government intervention. Some suggest the DOJ's antitrust lawyers have shown sympathy to arguments for a "partial withdrawal" of digital copyrights from the consent-decree framework.

But new arrangements to replace that framework ultimately may pull the labels and PROs back in. Billboard reported recently that the DOJ may be considering revisions that impose an even tighter regulatory scheme. According to the report, the Justice Department circulated a letter letting ASCAP and BMI know it is considering allowing any single co-owner of a "split work" — also known as a "fractional, "co-authored" or "co-pub" composition — to issue a license for 100 percent of the work. This is in contrast to the current practice in the music industry, whereby everyone who has a piece of the copyright needs to agree to license the work. The music companies have let their resulting unhappiness be known, albeit only off-the-record.

Not everyone has been so unhappy with the DOJ trial balloon on split works. Billboard quoted streaming service Pandora as saying: "We appreciate that the Department of Justice is taking steps to prevent further anti-competitive behavior in music licensing." Matt Schruers of the Disruptive Competition Project has framed the reported DOJ inquiry as actively pro-competition. Per Schruers, the music industry has created "artificial gridlock" among its rights-holders by allowing each co-author the power to unilaterally veto, but not unilaterally authorize, the license to use a copyrighted song. This means that a single rights-holder with only a small percentage of ownership in the work may pull the work when a licensing agreement ends, or deny a license to begin with.

These sorts of unilateral decisions by fractional rights-holders have been costly to services like Pandora Radio. Two years ago, Universal Music Publishing Group, owners of at least fractional rights in 20 percent of the music in the BMI catalog, withdrew its digital rights from BMI, a move that was followed by doubling the rates it sought to charge Pandora. And in another example, a different publisher, BMG, also withdrew its rights, but in this instance the result was Pandora took down all of BMGs wholly owned works and Pandora's customers were cut off from a substantial trove of the BMG catalog.

Is this what Congress intended with its last major revision of the Copyright Act, back in 1976? It doesn't appear so. Contemporary reports from the U.S. House summarizing the changes conclude:

"Under the bill, as under the present [pre-1976] law, coowners of a copyright would be treated generally as tenants in common, with each coowner having an independent right to use or license the use of a work, subject to a duty of accounting to the other coowners for any profits."

That's not always how split works licensing model operates today, as the UMG example demonstrates. To license use of a song, Internet companies may end up having to cut separate deals with each fractional rights-holder. More deals mean more transaction costs, as well as more potential dissenters with the power to scuttle those deals. The process is particularly onerous for new potential entrants to the digital market, and the leverage enjoyed by the major labels and publishers only grows as they continue to consolidate. Today, Sony alone controls nearly half of all royalties collected.

The purpose of copyright is not merely to provide monopoly revenue streams to content companies, but to ensure that creative works actually reach the public. Thus, for the DOJ to clarify obligations under the decades-old consent decrees could make sense. Allowing fractional rights-holders to authorize use of a work unilaterally is one potential avenue to untangle the complex web of rights in music and bring the licensing system more in-line with those of other copyrighted works with multiple authors.

To be clear, no one is asking to eliminate the consent decrees, even though all sides officially say they favor competition and the free market. Ironically, those who laud the competition they say would follow from allowing rights-holders to "partially withdraw" digital music rights tend to fear simplification of the system as a whole, precisely because would make competition among rights-holders more likely.

For instance, they oppose allowing fractional rights-holders to license joint-authored songs on grounds that this would create a "race to the bottom" in digital copyright licensing, lowering prices that could be commanded on the open market. Publishers and PROs thus must find a way to thread the needle in arguing both that the free market commands we let them partially withdraw digital rights and that the free market is lousy when co-authors compete with one another on price.

Any recommended modifications by the DOJ would have to be agreed to by the PROs and then approved by a court. In the meantime, we need a more robust public conversation around how to handle thorny issues like split works. Of course there's an irreducible tension between (a) the "exclusive rights" held by rights-holders in their "writings and discoveries" ("exclusive rights" just means the power to "exclude" non-rights-holders' use) and (b) the goal of the U.S. Constitution's Progress Clause, which gives Congress the power to grant such rights to "promote the progress of science and the useful arts" for rights-holders and non-rights-holders alike.

There are a few things about which almost everyone in this conversation already agrees: markets should be competitive; the public has an interest in copyright; and public policy should meet its Constitutional aim to encourage both creative and technological innovation. We can't help but wish, in navigating this thicket of thorny issues, we were discovering simpler arguments and simpler solutions.

Mike Godwin is General Counsel and Director of Innovation Policy at R Street Institute. Sasha Moss is a Google Policy Fellow at R Street Institute.

from the yeh-fired dept

It seems like every presidential election cycle, which comes around far too often and lasts for far too long for my taste, there inevitably ends up being some kind of row between some musicians and some politicians over music used at campaign events. The targets of these disputes tend to be Republican candidates, due to the political demographics of musicians as a general thing, but Democrats have been targeted as well. And, as we've mentioned in the past, other than creating a stir in the media and hoping the target campaign relents, there's roughly shit-all these musicians can do about it. But that stir can often times be enough, especially if the musician uses the opportunity to pimp a rival candidate.

Like Bernie Sanders, for example. Apparently when walking ego Donald Trump decided that he was going to announce his candidacy for President of these United States, his campaign decided to use Neil Young's "Rockin' in the Free World" at the event. Neil not only wasn't pleased, but he used the opportunity to boost the candidate he does endorse.

"Donald Trump was not authorized to use 'Rockin' In The Free World' in his presidential candidacy announcement," said Young's manager in a statement. "Neil Young, a Canadian citizen, is a supporter of Bernie Sanders for President of the United States Of America."

As it turned out, as it usually does, Trump was authorized to use Young's music through an ASCAP license. That said, maybe it's time politicians learned to take the extra step and clear things with musicians before using their music, if for no other reason than to protect against the backlash becoming an advertisement for a rival campaign. Campaigns are very much like brands, after all, and the last thing a brand wants to do is get a competitor's name in circulation. That's got to be doubly so when the rival "brand" is someone like Bernie Sanders who, think whatever you like of him, is starving for more name-recognition on the national level. A couple of simple phone calls from the campaign office would likely inoculate against this sort of thing happening, where now every quote from Young on this dust-up mentions Young's support of Sanders.

A press secretary for the real estate mogul said Wednesday that Trump would respect the wishes of Neil Young and no longer use "Rockin' In the Free World," which Trump featured Tuesday during his announcement that he was seeking the Republican Party's nomination for president. Trump press secretary Hope Hicks said Wednesday that "despite Neil's differing political views, Mr. Trump likes Neil very much."

It's a good way to spin the ending of this story for Trump's team, appearing so reasonable and agreeable to Young's antics, which come off looking petty. Still, no reason to let your campaign's music choice give the artist an opportunity to pimp Bernie Sanders. There are enough conservative musicians out there making music.

from the nice-try,-but-no dept

Last year, we wrote about a somewhat crazy lawsuit involving ASCAP, Pandora, and various record labels that was officially about trying to force Pandora into paying higher rates. There were a lot of moving parts in the case, but a key point was that various publishers (owned by the major record labels) pulled a neat little trick in which ASCAP allowed the publishers to "partially remove" their catalog, such that ASCAP could still license the catalog to traditional organizations, but not to "new media" companies (i.e., Pandora). Then, the publishers tried to "negotiate" independently with Pandora, and by "negotiate" I mean "refuse to tell Pandora what songs were no longer covered by ASCAP and then threaten a massive lawsuit if Pandora accidentally streamed any of those songs." Under such pressure, Pandora caved and agreed to pay much higher rates to those publishers, and ASCAP then spun around and tried to argue that those new rates were much more representative of "market rates" leaving out how the whole thing was planned together as a group as a form of collusion. Thankfully, the district court recognized what was going on, and mostly sided with Pandora, raising the rates slightly, but nowhere near as much as ASCAP and the publishers sought.

ASCAP and the publishers appealed, but the appeals court has now easily sided with Pandora, seeing no problems with the lower court's rulings. The ruling [pdf] doesn't get into the whole collusion bit, but does note that allowing publishers to do this "partial removal" trick quite clearly violated the letter and spirit of the ongoing "consent decree" that ASCAP has with the Justice Department, to guarantee that it's not violating antitrust law. The consent decree says that if someone wants to license music that ASCAP has the right to license, ASCAP has to provide that license. Since it makes no distinction among different kinds of services, ASCAP can't just make up that part:

Appellants contend that publishers may withdraw from ASCAP its right to license their works to certain new media music
users (including Pandora) while continuing to license the same
works to ASCAP for licensing to other users. We agree with the
district court’s determination that the plain language of the consent
decree unambiguously precludes ASCAP from accepting such
partial withdrawals. The decree’s definition of “ASCAP repertory”
and other provisions of the decree establish that ASCAP has
essentially equivalent rights across all of the works licensed to it.
The licensing of works through ASCAP is offered to publishers on a
take‐it‐or‐leave‐it basis. As ASCAP is required to license its entire
repertory to all eligible users, publishers may not license works to
ASCAP for licensing to some eligible users but not others.

Basically, the consent decree is quite clear: if you have the right to license the music, you have to license it to all-comers, and you can't make up artificial classifications that you won't license it to. As the ruling notes, it seems what ASCAP and the publishers are really trying to do is to rewrite the consent decree on the fly and have the court system sign off on it. The court will not do that:

Appellants would have us rewrite the decree so that it speaks
in terms of the right to license the particular subset of public
performance rights being sought by a specific music user. This
reading is foreclosed by the plain language of the decree, rendering
Appellants’ interpretation unreasonable as a matter of law

Of course, ASCAP, the publishers and the labels have been lobbying quite hard to get the DOJ and/or Congress to throw out the consent decree altogether, so that they can go back to colluding in this matter to try to jack up rates. Expect those efforts to expand even more given this ruling.

Finally, the court also says that the new rates set by the lower court are perfectly fine and it sees no reason to change those rates, no matter how much whining ASCAP might do about the new rates.

Having reviewed 1 the record and the district court’s detailed examination thereof, we conclude that the district court did not
commit clear error in its evaluation of the evidence or in its ultimate
determination that a 1.85% rate was reasonable for the duration of
the Pandora‐ASCAP license. We likewise conclude that the district
court’s legal determinations underlying that ultimate conclusion—
including its rejection of various alternative benchmarks proffered
by ASCAP—were sound.

Basically: just because you say the rates are unfair doesn't make them unfair. Either way, given the way ASCAP and the publishers have whined and complained about this entire process, expect that to reach a new level of ridiculousness in the near future, with a bunch of bogus talk about how absolutely unfair life is for them, even as they rake in tons of money.

from the look-at-that dept

Over the last few months, you may have noticed that ASCAP, BMI and the various music publishers have been pushing strongly to end the so-called "consent decree" around music publishing. This was an agreement from 1941 (and reviewed in 2001) limiting how performance rights organizations like ASCAP and BMI could act, given their position as a somewhat natural monopoly over the compositions they represented. The idea was to stop those companies from holding those works hostage -- which is why there are things like rate setting procedures by the Copyright Royalty Board. Now, we have our problems with the CRB and the rate setting process, but there is a very real fear that ASCAP, BMI and others would make music streaming prohibitively expensive if given the chance. The whole focus on getting rid of the consent decree is to try to remove any effort to block them from jacking up their prices to ridiculous rates.

The attempt to ditch the consent decree seemed especially odd, given that just months earlier, a court had called out the clear collusion by ASCAP and a bunch of music publishers to try to artificially jack up Pandora's rates. The details were a little convoluted, but basically certain publishers "withdrew" certain music from ASCAP, claiming they wanted to negotiate directly with Pandora. They didn't negotiate in good faith, and basically waited right up until the deal was about to expire. They then refused to even name what songs would no longer be covered, leaving Pandora at a very real risk of streaming songs it no longer had the right to (without even knowing which songs were being "pulled.") Because of this, Pandora was forced to sign exorbitantly high rates, which ASCAP and others then used to try to get even higher rates for others. It was clearly collusion, because while ASCAP should have been upset about publishers withdrawing music, it clearly was not. Furthermore, there were clear discussions between ASCAP and the publishers about all of this.

The end result of that case was that ASCAP lost its attempt to really jack up rates to Pandora much higher, but many people wondered how ASCAP could get away with doing that without any sort of punishment. Well... new reports say that the Justice Department is
investigating ASCAP, BMI, Universal Music Publishing and Sony/ATV over possible collusion. This is being done as part of the DOJ's review of the consent decree, but ASCAP's decision to attack the consent decree right after a court called it out for collusion may backfire badly:

The CID requests are seeking documentation across a lot of particulars, including the effect of the consent decrees on rates, whether partial withdrawals of digital rights should be allowed, and plans to license other rights beyond the public performance rights that PROs handle today. However, a memo obtained by Billboard that was sent to employees by ASCAP senior VP of legal Richard Reimer began by noting that the CID is connected to the DOJs review of the consent decree. And, as a possible reminder to be careful of what you wish for, the DOJ is also investigating of alleged coordination among ASCAP, BMI, Sony/ATV Music Publishing, and Universal Music Publishing Group.

That aspect of the DOJ investigation was mentioned in a note to ASCAP employees telling them to "preserve all documents, whether in paper or electronic format, on all the CID-related topics."

In the Billboard article, the publishers and ASCAP insist they're not worried about all of this because they believe the judge in the Pandora rate setting case "got it wrong." That's quite a bit of hubris to have, given all of the evidence of collusion that was presented in that case. It seems quite possible that rather than ending the consent decree, as ASCAP and publishers would like, the DOJ may actually come down on all of them for some fairly serious antitrust problems.